China's Housing Market: Is a Bubble About to Burst?
Milken Institute
Download Document| Date Published | 2012 |
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| Primary Author | James Barth, Michael Lea, Tong Li |
| Other Authors | |
| Theme | |
| Country | China |
Abstract
The purpose of this paper is to examine whether the decade of rapid growth in home prices in fact represents a housing bubble. Another purpose is to assess whether the authorities are able to achieve a “soft landing” in the housing market if a bubble exists. This is especially important given that residential investment accounts for roughly one-sixth of economic growth and China’s 2012 growth is on target to be the slowest in more than two decades. Still another point of inquiry is whether the home price declines that have occurred in some regions will trigger a financial crisis, similar to what happened in the United States. The plan is to assess the current situation in China’s real estate market, review relevant policies that have been implemented, identify potential risk factors, and consider policy ideas, including less emphasis on and support for homeownership, that would be appropriate based on other countries’ experiences with housing booms and busts.